DTEK Energy group and its lenders have entered into override agreement to effect restructuring of bank debt

DTEK Energy group and its lenders have entered into override agreement to effect restructuring of bank debt

DTEK29 March 2017

The DTEK Energy B.V. group (the “Group”) has entered into an override agreement which governs the long-term restructuring of the Group’s bank debt (the “Override Agreement”) with a vast majority of its existing lenders (the “Bank Lenders”). Execution of the Override Agreement is a crucial step for the Group in the long-term restructuring of its debt. It will enable the Group to meet its debt service obligations and continue developing its operations.

Following consensual negotiations between the Group and its Bank Lenders, the restructuring proposal of the Group with respect to bank debt has now been implemented pursuant to the override agreement which has become effective today. The Override Agreement overrides and amends the terms of the vast majority of the Group’s facilities (the “Overridden Facilities”). In particular it extends the maturity of the Overridden Facilities to 30 June 2023.

The Override Agreement follows the long-term restructuring of notes issued by DTEK Finance plc (“DTEK Finance”), by which DTEK Finance’s existing notes were exchanged into new notes with an extended maturity of 31 December 2024 (the “New Notes”) pursuant to a scheme of arrangement sanctioned by the High Court of Justice of England and Wales in December 2016, as well as the launch of an exchange offer in December 2016 pursuant to which 98% of the Bank Lenders by value bound themselves to the restructuring heads of terms proposed by the Group. With the entry of the Group into the override agreement, the heads of terms have now in large part been implemented.

Key terms of the override agreement are as follows:

  • Principal indebtedness will be repaid as follows: US$ 60 million in 2017, US$ 40 million in 2018, US$ 80 million in 2019, US$ 80 million in 2020, US$ 80 million in 2021, US$ 80 million in 2022 and all remaining outstanding debt and accrued PIK in 2023.
  • The interest rate on each Overridden Facility is the aggregate of 5% p.a. and EURIBOR/LIBOR as applicable, with cash interest to be paid monthly as follows: 51% of the interest accrued in 2017 and 2018, 60% of the interest accrued in 2019, 70% of the interest accrued in 2020, 79% of the interest accrued in 2021, 88% of the interest accrued in 2022 and 100% of the interest accrued in 2023. The remainder of the interest accrued shall be PIK and shall be capitalised and added to the principal indebtedness.
  • A quarterly cash sweep to repay/prepay the principal indebtedness.
  • Voluntary prepayments can be made at any time on a pro rata basis, with break costs applicable in certain circumstances.

Maxim Timchenko, CEO of DTEK, said: “First of all we would like to thank our creditors for their understanding and support during the debt restructuring process. The key objectives of the restructuring process were to strike a fair balance between the interests of all DTEK stakeholders: customers, employees and creditors.

In particular, we wanted to ensure that the terms of the debt restructuring preserve DTEK's continuing ability to provide reliable, high-quality energy services to the millions of families and corporate and institutional customers that depend on it.  Equally, another main objective in the debt restructuring negotiations was to protect the interests of company's employees who throughout the past difficult times demonstrated their professionalism and dedication.

The need to restructure DTEK's debt arose from geo-political and macro-economic circumstances that were entirely outside of the company's control or doing.  Despite this, a central guiding principle set by the company's shareholders and management has been the repayment in full of the debt DTEK owes and the fair and equitable treatment of creditor classes.

We believe that this agreement that has been reached with our creditors achieves each and all of these objectives. We also believe that it has restored the confidence of capital markets in DTEK's enduring financial strength and its ability to return to these markets in due course for raising investment capital to further improve the quality of our services and the efficiency of our operations.

We look with confidence to the future. Not only are there encouraging signs that Ukraine's economy is turning around.  Also, the Government has embarked on a bold process of energy sector reform that, we believe, will instill efficiency and competition and ultimately benefit the consumers and population at large.  DTEK embraces the promise of a greener, more efficient and consumer-orientated energy sector that these reforms entail.  We are intent to seize the opportunities that the transition to a modern energy industry will provide».

The Group was advised by Latham & Watkins, the Group’s legal advisers, and Rothschild, the Group’s financial advisers.

For more information, please contact:

Oksana Nersesova

IR Manager, DTEK

Tel.: +38 (044) 581 45 22

Email: ir@dtek.com

Cautionary Statement

This press release is for information purposes only and does not constitute any offer to sell or the solicitation of an offer to buy any security in the United States or in any other jurisdiction. The New Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or applicable state or foreign securities laws and may not be offered or sold in the United States absent registration under federal or applicable state securities laws or an applicable exemption from such registration requirements.

This press release may include projections and other “forward-looking” statements within the meaning of applicable securities laws. Any such projections or statements reflect the current views of the Group about further events and financial performance. No assurances can be given that such events or performance will occur as projected and actual results may differ materially from these projections.

This communication is directed only at (i) persons who are outside the United Kingdom, (ii) persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2) of the Order (all such persons together being referred to as “relevant persons”). Any investment activity to which this communication relates will only be available to, and will only be engaged in with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

Neither the content of the Group’s website nor any website accessible by hyperlinks on the Group’s website is incorporated in, or forms part of, this announcement. The distribution of this announcement into certain jurisdictions may be restricted by law. Persons into whose possession this announcement comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

Profile

DTEK is a strategic holding company that develops four business streams in the energy sector. DTEK's companies employ 75 thousand people. Maxim Timchenko is the Chief Executive Officer of DTEK. 

DTEK companies produce coal and natural gas, generate electricity at the fossil-fuelled power plants and renewable energy power plants, supply heating and electricity to end consumers, and provide energy services. Four operating companies—DTEK ENERGY, DTEK Renewables, DTEK Oil&Gas, DTEK ESCO— directly manage production companies in each of the business streams.

DTEK's production indicators for 2016: the company produced 31.3 mln tonnes of coal, 1.6 bcm of natural gas, generated (supplied) 40.1 bln kWh of electricity, out of which 608.4 mln kWh came from the Botievo wind farm;   and transmitted 45.8 bln kWh of electricity via the networks.

DTEK is part of the financial and industrial group System Capital Management (SCM). The shareholder of the group is Rinat Akhmetov.

For more information, visit: www.dtek.com

To learn about the social partnership projects in progress in the towns and cities of DTEK companies' operations and get a detailed status report on their implementation, visit www.spp-dtek.com.ua

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